ATCC IPO proves highly popular
Issue oversubscribed 74 times, according to promoter Abraaj
Following the 74 times oversubscription of Arab Technical Construction Company’s (ATCC) maiden share issue, Dubai-based private equity firm Abraaj Capital, has announced that it holds the second largest stake with 10% equity in ATTC.
Shuaa Capital, lead manager and book runner for the IPO (initial public offer), estimated that more than Dhs14 billion in subscriptions were received during the ten-day subscription as per the early information from receiving banks. This represented an oversubscription rate of about 65 times. However, Abraaj confirmed that the issue was oversubscribed 74 times.
ATTC will have a paid-up capital of Dhs400 million, allocated over 400 million shares, with a par value of Dhs1 per share. ATTC offered 55% of the capital to the public.
The balance 45% is held by 11 founders. Abraaj is one of them, with an investment of Dhs40 million for a 10% stake, making it the second largest shareholder in the company.
ATCC has said intends to invest in the contracting sector through acquiring and owning shares in one or more existing companies in the UAE with the purpose of benefiting from the ongoing construction boom.
The company will rely on an experienced management team in the contracting sector. The board will include Riad Kamal, chairman and managing director of Arabtec, while Abraaj Capital will be represented by Arif Naqvi, its CEO and vice-chairman. The Abraaj acquisition was through the recent Abraaj Real Estate Fund. This is the first investment made by the fund since its closing on June 30.
Simon Davies, CFO and executive director at Abraaj, said ATTC offers an extremely attractive investment opportunity as it allows the fund to participate in the booming construction sector in the UAE. He said that the fund would continue investing in such opportunities in the region. “We are looking at some very exciting prospects in this sector, which is flourishing supported by surplus liquidity, good products, and ongoing regulation and law reforms, that offer greater protection for investors,” said Davies.
Commenting on the Arabtec IPO, Shuaa Capital’s head of capital markets, Salam Saadeh, said: “Despite its offering during the month of August when capital markets have traditionally been less active, ATCC’s IPO was met with a huge response from the investor community.
“This accomplishment reflects high investor confidence in the founders and in the prospects of the construction sector of the UAE. It also demonstrates that the markets are ready to look positively at new issues outside the sectors that have traditionally dominated the AGCC markets, such as telecom, banks finance, and insurance.”